Canada is missing out on the enormous opportunities offered by the BRIC countries—Brazil, Russia, India and China—according to a Conference Board of Canada report released today.

“The Rise of the BRICs: What Does it Mean for Canada?” concludes that Canada’s share of trade and investment with the BRICs is small and linkages with these countries, especially China and India, need to be deepened.

“Canadian businesses must take advantage of the low-cost manufacturing and services available in the BRIC countries, particularly China and India. This would allow us to concentrate on moving up the value chain by becoming specialized in knowledge-intensive, high-value-added goods and services,” says Sheila Rao, senior research associate at the Board.

Less than two per cent of Canada’s merchandise exports go to China, which is the largest of the BRIC export destinations, and Canadian investment in China represents less than 1 per cent of the Canada’s total outward foreign direct investment. Outward foreign direct investment in India, meanwhile, is all but invisible.

“There are also huge export and investment opportunities for Canada in these countries. China and India are resource hungry, have massive infrastructure needs, and their enormous and growing middle-class population is boosting demand for products worldwide,” Rao adds.

Questions are often posed about the risk of lost jobs and diminishing market share that the BRICs represent for Canada. The report addresses these issues.

BRIC exports, particularly those from China and India, do represent potential job losses in developed economies such as Canada and the United States, according to the report. This threat is most immediate for industries dependent on low-skilled labour, which reinforces the importance for Canada to move to higher-value added goods and services.

Over the past decade Canada’s share of U.S. merchandise imports has dropped while that of China has increased. China is now the second largest exporter to the U.S., after Canada; in 1997 it was in fourth place.

The share of U.S. imports from India, Brazil and Russia also increased, but to a much smaller extent. Like Canada, the U.S. is importing low-cost manufactured goods from China.